English to Serbian Bus/Financial Finance (general)

Shareholders’ equity, which reflects original capital contributions, income/loss of the bank, and distributions to its shareholders, generally comprises Tier 1 capital. Tier 2 capital generally includes undisclosed reserves, revaluation reserves, and general provisions.13 The ratios are calculated by dividing the amount of Tier 1 (or Tier 1 and Tier 2 capital) by the amount of risk -adjusted assets. A risk-adjusted weight takes into account that riskier assets should require more capital to be on hand. Generally, Treasury securities have no risk weight attached, mortgages have 50% weight, and other assets (such as loans to customers) have 100% weight. The example below illustrates how manipulation of the weights could change the required capital.